Coloradostache,
As far as getting a mortgage on the second house using traditional methods, you will have to qualify for both mortgages without counting any of the rental income yet to come. If you can't qualify for two mortgages on your current income, you could move out for a year and live somewhere else while renting out your place. Many banks will count that first year of rental income as income. (They will probably only count about 70% of the income though.)
In my opinion, the second option with your friend is the best option for you. Unless your friend has a VA or FHA loan, you can't technically assume the mortgage, but you can do what is called a "subject to" deal. There is a slim chance that the bank will call their loan, but the odds are in your favor as long as you make the payments on time. You can also accomplish effectively the same thing by setting up a land trust with your friend. This rout is more complicated, but the chances of the bank calling the loan are even smaller, as I have come to understand it.
I would push hard for a subject to or land trust deal. Even though you would probably need to get a real estate attorney to help with the deal, you and your friend will be saving money in every other aspect of the deal.
